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View Full Version : Are gas prices really that bad???


MudslinginFX4
08-16-2005, 05:32 PM
With all the talk about gas prices lately I've been doing some thinking. Are they really that bad to us (the lco's) when it's all said and done? Sure... everyone is having to pay more for gas for their equipment, trucks, etc.. but what is it really costing you per yard?

Here is something to throw out at you. I am currently now taking care of right at 100 properties (few commercial, mostly residential) on Tuesdays-Fridays running one 3-4 man crew. I usually average about $1050-$1200 per day. I also usually spend somwhere in the neighborhood of $50-60 dollars a day in gas/diesel. On Mondays we do landscaping work, and occasionally I will run another truck other days of the week also doing landscaping work.

Back to my point and main question... For the bigger, more established companys is gas really hurting you that bad? I can actually see higher gas prices being a plus to bigger companys because it keeps the low baller without insurance and proper equipment from even entering the business because after they drive to the site, use the mower and stuff and are only charging $20.00 for a yard and spending $7 to get there and run their equipment they stop. I know for a FACT that I have picked up several yards because the so called "scrubs" (even though i don't like that terminology b/c I really honestly could care less what they charge or look like) have stopped cutting as much grass around here with the prices rising.

What does everyone think? I know expensive gas prices hurt us personally still but are they as bad as we really make them out to be? Are you really loosing (not putting in your pocket) that big of a difference?

justanotherlawnguy
08-17-2005, 01:01 AM
I dont see it as a huge issue either. I am paying 2.50-2.60/gallon like everyone else.
When gas was 2.00/gallon, i spent 48 for a fill up. Now .50 later it cost me 12.00 more, so what. I fill my truck 2 times per week and equipment once. I pick up an extra hedge trimming job once a month, or do a couple of one time mowings to make up the extra cost.

I am busy enough as it is, I have hardly even answered my phone in the last 3 months. When I need some extra cash, I just answer the phone and take an extra job or 2.

Everybody complaining that they are going to be forced out of business, or wondering if they should charge a gas surcharge. Are you kidding me? Run your business right and gas prices arent even an issue.

topsites
08-17-2005, 03:03 AM
No, I'm hardly spending 20% more actual money with over twice the business than what I did my first year and the fuel budget at a time of 99cent fuel is holding up today, thou it does mess with the expense %'s a lot faster than it used to.

In addition while I see a lot of crap about fuel surcharges and raising prices (don't get me wrong, raising prices is a good thing), there really is no reason for me to panic thou the one problem I AM worried about is once actual fuel shortages start to hit us, then EVERYBODY has a problem (not just us).

65hoss
08-17-2005, 04:17 AM
I dont see it as a huge issue either.

Everybody complaining that they are going to be forced out of business, or wondering if they should charge a gas surcharge. Are you kidding me? Run your business right and gas prices arent even an issue.

I agree. Once they really look at the numbers they will see it isn't as bad as they think. Fuel is always one of my least expensive expenses over the course of the year.

rodfather
08-17-2005, 06:31 AM
Last year, we spent just under 17K in diesel and gas. Sorry, but to me it IS an issue.

YardPro
08-17-2005, 07:26 AM
my fuel bill has gone up $500.00/month.

we will go from about 12K last year to about $15-17K this year....

how would you feel about loosing a few thousand dollars??????

65hoss
08-17-2005, 07:42 AM
my fuel bill has gone up $500.00/month.

we will go from about 12K last year to about $15-17K this year....

how would you feel about loosing a few thousand dollars??????
...but if you raised rates last year it should have compensated for that.


On another note...raising prices to often or always putting in surcharges will eventually lose you accounts. I think in the short run of this year you are better off trying to find ways to reduce costs and fuel consumption. Take off mowers you don't need. An extra 500-1000 lbs of weight uses more fuel. Tighten routes, use sharp blades all the time. Keep those tires inflated.

Point is, overall in the scheme of things, fuel is not the biggest concern. Its a concern, but not the biggest to worry over.

Rod, I'm kinda surprised at your statement. Last year when everyone was freaking, you were one of the ones that pointed out it was a not that big of a deal. We both said, that if prices were going up and the person was struggling then they probably didn't price the job correctly.

rodfather
08-17-2005, 09:19 AM
[QUOTE=65hoss
Rod, I'm kinda surprised at your statement. Last year when everyone was freaking, you were one of the ones that pointed out it was a not that big of a deal. We both said, that if prices were going up and the person was struggling then they probably didn't price the job correctly.[/QUOTE]

Well, 3 things play into my issue now Eric:

1. I am doing almost double of a year ago in terms of mowing alone (400 acres a week) now.
2. I didn't raise any rates at the beggining of the year (for a number of reasons).
3. Fuel is about 15 - 20 % higher today than it was last year at this time.

Since I am having my best year ever, I am not struggling in the least bit. But frankly, I don't want give lose a few grand off the bottom line due to fuel escalation expense. Hence, I have used a monthly fuel surcharge the previous 3 months and not one peep from anyone.

DLS1
08-17-2005, 03:36 PM
Gas prices may not be nothing to you if your customers are within a few miles from your home. I am in the country and I drive 20 miles to a bigger town before I even get to my first job.

You can't generalize that it isn't a concern just because it isn't a concern in your situation.

2k1yzfr1
08-17-2005, 04:53 PM
Funny thing today at the gas station when I went in to get a receipt and some lady in line was in there bitching about gas prices being so high. In her hand were 2-20oz Dasani waters at $1.19 a piece. She was complaining about a gallon of gas costing $2.50 but will pay $1.19 for a 20 oz water?

HOOLIE
08-17-2005, 07:52 PM
Funny thing today at the gas station when I went in to get a receipt and some lady in line was in there bitching about gas prices being so high. In her hand were 2-20oz Dasani waters at $1.19 a piece. She was complaining about a gallon of gas costing $2.50 but will pay $1.19 for a 20 oz water?

How true. Same type of people that won't bat an eye at a $4.50 beverage at Starbucks as well.

I wonder how my former boss it taking the gas prices...back 5 or 6 years ago, gas was around $1, then shot up to around $1.30. He put in a surcharge back then. He's probably jumped off a bridge by now...

nelbuts
08-17-2005, 08:32 PM
Yes it is a problem for anyone who does year round service.

The cost of fuel for mowers and hand tools are a small part of the problem.

You have fue and oil for your trucks to get there. To go to the dump. To make estimates. To go to mower shops.

Then when you order parts or buy new equipment you will find hidden fuel surcharges you are paying for but do not see.

Fertilizer and chemicals will increase.

If you signed a commercial property in Jan. here it now is $.60 more per gallon.

If you signed that same property 2 years ago it is $1.00 more per gallon.

Many of my commercial contracts are "on going" in that the renew automatically unless there is a change. This year there will be a change.

Oh and my fuel bill is now about $570 more per month. If that is not a big deal to you then just send me a check and write it off!

qps
08-17-2005, 11:53 PM
Last year, we spent just under 17K in diesel and gas. Sorry, but to me it IS an issue.


Also an issue here...have been considering the fuel surcharge but will hold out till next seasons contracts, raise cost to cover fuel increase and add a fuel surcharge clause for future price increases during the season...if its not an issue with you, consider this... example...a large account 50+ acres, it cost me around 89.00 more in fuel to cut this year than last, wide area mowers and trucks....that my friend can add up fast. :)

LwnmwrMan22
08-18-2005, 07:18 AM
Also an issue here...have been considering the fuel surcharge but will hold out till next seasons contracts, raise cost to cover fuel increase and add a fuel surcharge clause for future price increases during the season...if its not an issue with you, consider this... example...a large account 50+ acres, it cost me around 89.00 more in fuel to cut this year than last, wide area mowers and trucks....that my friend can add up fast. :)

Yes, it's the large area accounts where the fuel for the mowers adds up. Too bad we're under contract for one more year with the school district.

I too am going to hold off for the rest of the year, and just raise prices again about 10% again next year.

jtrice11
08-18-2005, 11:19 AM
Hell yeah its a big deal, and hurting me. Its money that's coming right out of the pure profit margin, which in turn means its coming right out of my pocket. To me it doesn't matter if its only 30-50 bucks a week, that's 30-50 bucks that normally would end up in the bank account or paying off equipment. Instead its getting gobbled up by machinery.

QualityLawnCare4u
08-18-2005, 09:30 PM
I agree with Jtrice, HELL YEAH its hurting me big time! When you drive to one yard thats 10 miles, next yard is 7 miles, next is 9 miles, and you are getting 11 miles to the gallon dam right it hurts!. I have 2 yards right now that Im considering dropping because of the driving distance is getting 20% of my pay for the yard. I paid 2.01 3 weeks ago today and it just hit 2.80 this afternoon.

jtrice11
08-20-2005, 11:06 AM
I agree with Jtrice, HELL YEAH its hurting me big time! When you drive to one yard thats 10 miles, next yard is 7 miles, next is 9 miles, and you are getting 11 miles to the gallon dam right it hurts!. I have 2 yards right now that Im considering dropping because of the driving distance is getting 20% of my pay for the yard. I paid 2.01 3 weeks ago today and it just hit 2.80 this afternoon.

Hey what do you know....someone agreed with me.

dkeisala
08-20-2005, 12:32 PM
I think these high fuel prices provide an excellent opportunity to look at my business and tighten the ship a bit.

I'm not having a stellar year financially but the numbers are staying in-line with last years revenues and that's fine with me because I've been working to increase productivity and reduce debt.

Gas prices here in the Northwest are drastically higher than last year, $2.59/gallon last night, probably higher today. But while I'm doing the same amount of business, I've actually spent $750 LESS on fuel year-to-date over the same period of time in 2004. I've done this by keeping the routes very tight, no unnecessary trips, etc. In addition, I've raised prices.

I think it's silly not to raise prices every year. It's not something I necessarily like to do and I stress about it for weeks until it's over and done with but it just makes sense for many reasons. The fuel situation provides the perfect excuse to do this.

I raised prices by 4% across the board in 2004. This year, I raised client prices from 4% to 10% depending on productivity and dollars generated per man hour, historical information I gained through the use of CLIP. The only comments I've heard from people is that they'd been waiting for me to raise prices. Additionally, price increase weed out the cheapskates, weirdos and PITA's, keeping your business running just that much smoother.

Yes, higher fuel prices still affect me, that $750 savings could have been a tad higher but I'm trying to take a bad situation and make it work to my benefit, it's one of the key challenges in self-employement.